Value
4.7/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 5.7 |
| EV/EBITDA | 0.7 |
| p ocf | 6.3 |
| Analyst target | 5.0 |
- ▸P/OCF: 17.5x (FFO proxy — REITs gated off P/E)
SUI · Why this verdict
Why Sun Communities (SUI) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power. Earnings | The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%. | →Stable |
| CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder. | ||
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power. Peer-rank breakdown | Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated. | →Stable |
| CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story. | ||
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity. Quality breakdown | Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation. | →Stable |
| CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF. | ||
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect. Targets | Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats. | →Stable |
| CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback. | ||
Sun Communities beat earnings in 3 of the last 4 quarters with an average surprise of 54%, including a 168% beat in February 2026 and 52% beat in October 2025, suggesting analysts consistently underestimate the company's quarterly earnings power.
→StableEarnings
- Expectation
- The company beats earnings estimates in at least 3 of the next 4 quarters, sustaining the current beat pattern with average positive surprises above 20%.
CounterThe most recent quarter missed by 26%, and large beats in prior quarters may have been driven by non-recurring items; analysts may already be adjusting estimates upward, making future beats harder.
Sun Communities earns 60% net margins, is classified as an industry growth leader, and ranks in the top tier for margins among residential REITs, indicating a high-quality portfolio of manufactured home and RV communities with strong pricing power.
→StablePeer-rank breakdown
- Expectation
- Net margins remain above 50% over the next 12 months, confirming the current level is not temporarily elevated.
CounterA 60% net margin in a REIT often reflects depreciation and amortization accounting rather than economic earnings; the cash flow picture, where FCF is only 38% of net income, tells a more constrained story.
Free cash flow is only 38% of net income, flagged as a red flag in the quality assessment, meaning the company is generating substantially less cash than its income statement suggests, which constrains actual dividend coverage and capital reinvestment capacity.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 60% within 12 months, narrowing the gap between reported earnings and cash generation.
CounterREITs by definition have heavy real property asset bases requiring reinvestment; a FCF-to-earnings ratio well below 100% is structurally expected in the sector, and funds from operations is a more relevant metric than GAAP FCF.
The stock is trading at $124.41, only 2.7% below the analyst consensus target of $127.80, meaning the market has already priced in nearly all of the near-term fundamental improvement that analysts expect.
→StableTargets
- Expectation
- Analyst consensus price target rises above $140, more than 12% above the current price of $124.41, reflecting upward estimate revisions driven by continued earnings beats.
CounterResidential REIT stocks can trade above analyst targets for extended periods when interest rate expectations improve; the 3-quarter beat streak may drive analyst upgrades rather than a price pullback.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Sun Communities has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 54% and sits at the top of its industry for margins and growth, but trades within 3% of analyst targets and has a notable gap between reported earnings and free cash flow generation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.1 |
| ROA | 1.5 |
| Gross margin | 6.6 |
| Op margin | 5.4 |
| Net margin | 10.0 |
| Current ratio | 8.5 |
| FCF quality | 3.0 |
| Moat | 6.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 60%
- ▸Earnings quality RED FLAG: 38% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
4.6/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
Momentum
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 6.1 |
| MA position | 7.0 |
| Volume | 2.1 |
- ▸Below 200-MA (recent, shallow — too early to call)
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 7.4 |
| Price target | 7.0 |
- ▸LLM news sentiment: +0.55 (n=1)
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $5,958,000 (0.038% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.9 |
| quality rank | 4.7 |
| growth rank | 7.6 |
- ▸Best-in-class margins
Technical
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.8 |
| support resistance | 3.1 |
| 52w position | 8.3 |
Risk (lower is worse)
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 7.4 |
| volatility | 6.6 |
| put call | 10.0 |
| implied vol | 5.5 |
| beta | 8.2 |
| debt equity | 7.2 |
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 349.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (6)
- MOMENTUM:5.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:25d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.5<1.5@spot
- 8K_CRITICAL:4.01,4.01
Warning (1)
- DEATH_CROSS:momentum=5.9>=5.0 recovering
Reward-to-Risk
0.49
Upside
+2.9%
Downside
5.9%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 47
EdgeCatalyst-Driven — Earnings in 25d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.5 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.5<1.5@spot, 8K_CRITICAL:4.01,4.01) reinforce the read. Current asymmetry R:R is 0.49 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.6, Sentiment at 7.4, and Catalyst at 6.4; the weakest are Insider at 3.9, Growth at 4.6, and Technical at 4.7. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.49 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Earnings Beat Large Surprises
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 quarters, reversing the current strong beat pattern.
- P2Best In Class Reit Margins Growth
Trip ifNet margin falls below 40%, declining more than 20 percentage points from the current 60% level.
- P3Fcf Quality Gap
Trip ifFree cash flow as a percentage of net income falls below 20%, worsening more than 18 percentage points from the current 38%.
- P4Limited Upside At Analyst Target
Trip ifPrice drops below $112, more than 10% below the current $124.41, suggesting the market is revising the fundamental outlook lower.